Getting the most out of your rental property doesn’t have to be difficult. You just need to plan carefully right from the start.
The following are 6 tips to help you get started and maximize your rental income.
1. Be Diligent on Late Fees
Being respectful and kind to your tenants doesn’t mean becoming a pushover on matters related to rent. For many landlords, rent collections aren’t the most enjoyable. However, they are important if you are to have a profitable rental business.
Ensure that your renters know that your property is a business and that they have certain obligations under the lease.
You’ll be leaving money on the table by not holding tenants who are late on paying rent accountable. And, it’ll become much easier for them to get away with late payments again in the future, causing you more stress and additional work.
If your renter doesn’t include the late fees together with the late check, politely decline the payment until all fees are paid.
2. Increase Rent Strategically
Increasing rent is a common part of owning an investment property. But, it is a delicate balance that requires knowledge of your property’s value relative to your competition.
Before deciding to increase rent, do a comparative market research analysis of the area. Also, research sites such as Craigslist, Rentometer, Zillow, and the MLS if you have access.
Once you’ve done your research, the next thing is to plan how to increase the rent. One popular tactic is to communicate an offset to new expenses such as HOA fees and have them coincide with improvements to the property.
For example, you may plan to upgrade old windows from single to dual pane or paint the exterior of the home to coincide with a lease renewal. This way, the renter feels they are getting added value from the rent increase.
3. Minimize Tenant Turnover
Tenant turnover is one of the biggest killers of profitability for a landlord. When a renter leaves, you’ll be left without a stream of rental income for as long as it takes to find a replacement tenant.
Plus, you’ll need to spend hours cleaning the place up, and some money on placing ads and trying to market the unit.
Getting quality tenants should be your goal. And when you do finally get them, do everything possible to keep them!
Aside from offering a competitive rent, ensure that you are working to have a good landlord-tenant relationship. Whether you manage the property yourself or use a manager, make certain that your renters are treated with professionalism and respect.
4. Lower the Vacancy Rate
The best way to minimize vacancies is to find long-term tenants. But even when they must move, you need to minimize the turnaround time.
If you are lucky and have a property in a higher demand area, then you shouldn’t have a problem filling your vacant units. However, if you have a property in an area with lower demand, that might be a challenge.
So, what should you do then? The thing is, almost every property in every neighborhood has a solid demand at a price. If you have a high vacancy rate, you need to think about your price point.
If you get 8.3% less revenue each year due to a vacancy, then consider charging less in rent. For instance, renting every property one month faster for five percent less rent or two months faster for ten percent less rent, and so on.
5. Sell Ads, Rent Storage Space, or Install Solar Panels
There may be local businesses willing to buy advertising space. A simple banner hung on a side fence or exterior wall might bring in hundreds of dollars a month.
Have extra storage space? If so, consider renting it to non-tenants.
Further, consider going “green” by installing solar panels. Once installed, you can get an additional income stream by selling back excess energy to the grid.
In addition, your renters will enjoy reduced energy bills. This could even become an attractive feature for your rental property. You could even factor it into the rent price, permitting you to earn more income even as your renter enjoys reduced utility bills.
6. Target Your Ideal Tenant
Getting quality tenants is, needless to say, hugely beneficial. You’ll be able to save costs associated with vacant units and tenant turnover. Also, you’ll be able to set a higher rent and if they are suitable they are less likely to leave.
To get a good tenant though, you need to have a good tenant screening process in place.
There you have it – 6 tips to get the most out of your rental properties. By implementing them, you can be sure your getting maximum revenue from your real estate investments.